First Ontario….and now the Country.
Trudeau has a particularly ambitious plan for renewable energy projects, with a promise to commit nearly $6 billion in green spending over a four-year period and ramping that up to nearly $20 billion over 10 years. The Liberals will also incorporate climate impact analysis into federal contracting, which could get further money flowing into the green space.
All of that will be welcome news for Canada’s renewable energy companies, especially as the previous government focused investment on the oil and gas sector.
“It is fair to assume that the sector will be a big net winner under this government, as they have carved out specific spending in their infrastructure outlays for green energy,” said BMO’s Porter. “Beyond direct spending on the sector, it’s also safe to assume that the government will support the sector heavily through direct measures.”
Canada is set to head in a new economic direction with the election of Justin Trudeau and his Liberal party to a majority government. Trudeau will have four years to implement his electoral platform, which includes billions of dollars in new infrastructure spending and tax cuts aimed at the middle class. Here is how economists expect the new government will affect five key areas.
Following the victory, the Canadian dollar rose 0.2 per cent after shedding 0.8 per cent Monday in the lead-up to election night.
In the coming months, however, the loonie could see some weakness as the currency is hit with an “uncertainty premium,” notes David Tulk, head of global macro strategy at TD Securities. “As observed with prior changes in government, we anticipate the outcome to be modestly USDCAD positive.”
The loonie could also see longer-term weakness, as Trudeau has pledged to run a deficit for the next three years in order to spur economic growth.
“Longer term, more government debt will drag on the Canadian dollar and will make interest payments an increasingly large portion of the government budget,” said Darren Sissons, managing director and portfolio manager at Portfolio Management Corp. “This will ultimately decrease policy flexibility in future years.”